3 Stocks With Potential For Short-Term Gains
1. Modine Manufacturing (MOD): Data center demand tailwinds to serve as secular growth impetus
The thermal management technology provider delivered better-than-expected first-quarter earnings, thanks to strong sales of data center products, and HVAC technologies products.
Modine, which provides mission-critical thermal solutions, is on the path of reallocating resources to higher growth and higher margin businesses. Its recently announced investments to expand North American manufacturing capacity for data center cooling products is part of the strategy.
These investments are expected to have a positive impact in the second half of this year, and drive further growth when additional capacity comes fully online in fiscal 2027 (for Modine, fiscal 2027 starts next year) and support the company's goal of achieving $2 billion in data center revenues by fiscal 2028. Other than providing growth opportunities, North American capacity expansion should also help mitigate tariff risks.
For fiscal 2026, Modine raised its revenue and adjusted EBITDA expectations, now seeing revenue growth of 10% to 15% vs. prior projections for 2% to 10% growth - from its fiscal-2025 number of $2.58 billion. The latest guidance implies $2.84-$2.97 bln in FY-2026 revenues vs. $2.76 bln consensus.
Adjusted EBITDA for fiscal 2026 is now expected to be between $440 million and $470 million, higher by $20 million from its prior guidance. The new guidance represents ~12-20% growth from year-ago adjusted EBITDA of $392 million.
Although Modine's net debt increased to $403 million at June-end, up $123 million Y-o-Y and mostly driven by acquisitions - leverage ratio remains strong at 1.0x.
2. Sprouts Farmers Market (SFM): A beat-and-raise quarter supported by the paradigm shift to healthy eating trends and improving margin profile.
Sprouts Farmers Market reported a beat-and-raise second quarter. The grocery chain offering fresh produce - benefits from a broader shift to healthy living & wellness trends in recent years.
This is not just a guidance raise, the new guidance numbers start at a better place than the higher-end of previous guidance, like it now sees 2025 EPS of $5.20-$5.32, up from prior guidance of $4.94-$5.10.
FY25 revenue growth is expected to be 14.5% to 16%, vs. prior projections of 12% to 14% growth. The new growth guidance implies roughly $8.84-$8.95 bln vs. $8.79 bln consensus.
Comparable store sales growth for fiscal 2025 is expected to be 7.5% to 9.0%. Previously, the grocery chain expected 5.5% to 7.5% growth in comp sales for 2025.
Sprouts Farmer Market's margin profile has shown structural improvement in the last 4 years. Its gross margin has improved from 36.4% in Q2-2022 to 38.8% in Q2-2025, while EBIT margin has improved from 5.4% to 8.1% in the same period.
3. PTC (PTC) Bolstered By AI efforts
Engineering and design software provider PTC Inc. (PTC) reported much better-than-expected third-quarter earnings and revenue, and raised its projections for 2025, thanks to its continued AI efforts.
New product offerings and customer wins across its five focus areas of CAD, PLM, ALM, SLM, and SaaS, also helped the results.
Although macroeconomic uncertainty lingers for customers, the company noted that it is 'past the point of maximum disruption', and looks forward to 'productive customer engagements throughout Q4.'
Despite a challenging selling environment in Q3, its Annual Recurring Revenue (ARR) grew 9.3% y-o-y on a constant currency basis, while free cash flow for the quarter grew 14% from last year.
PTC raised its guidance for 2025 adjusted EPS to $6.63-$7.03 (from prior $5.80 to $6.55) vs. $6.13 consensus. It now sees FY25 revs of $2.57-$2.63 bln, up from prior $2.445-$2.565 bln vs. $2.5 bln Consensus.
Freecash flow for 2025 is seen at $850 million, the upper end of its prior guidance of $840-850 million, and representing ~16% y-o-y growth.
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